A new report by Blume Ventures highlights that nearly a billion Indians lack money for discretionary spending, limiting the country’s actual consumer market to 130-140 million people—comparable to Mexico’s population. An additional 300 million are emerging consumers but remain cautious spenders.

The report notes India’s consumer class is not expanding but deepening, meaning wealth is concentrating among the rich rather than spreading. This has fueled the rise of “premiumisation,” where brands focus on high-end products instead of mass-market goods. Sales of luxury housing and premium smartphones are surging, while budget-friendly alternatives struggle.

India’s post-pandemic economic recovery follows a K-shaped trend—where the rich prosper while the poor lose purchasing power. Rising income inequality has worsened over decades, with the top 10% of Indians now holding 57.7% of the national income. Meanwhile, financial savings have declined, debt has surged, and unsecured lending has been restricted.

While rural demand and recent tax relief may provide short-term economic support, long-term challenges persist. The middle class faces stagnating wages, declining savings, and job losses due to automation. These factors could impact India’s consumption-driven economy and slow down future growth.